Situations When you Have to Pay Advance Tax

So even if you are a salaried person and have annual tax dues of over Rs. 10,000 then you need to pay advance tax. Your employer regularly deducts TDS and deposits it to the government.

The certain other situations where you are expected to pay advance taxes are

Salaried individual with additional income sources such as capital gains on shares or property, rental income, interest on fixed deposits or from lottery wins.

If you are a freelancer, self-employed or running a business.

If you are carrying an activity of a professional like legal, doctors, accountancy or engineering.

How to Calculate Advance Tax

In order to calculate the advance tax, you need to list down all the possible income sources.

Assessing Income

The best way is to check all your financial assets for dividends and interests. Check bank account statements for all the credits details.

The salaried persons need to inform about additional income and income sources to their employer so that the tax calculations can be done properly.

For example, Ramesh is a salaried person (in the highest tax bracket of 30%) and he receives an additional income of Rs. 1 Lakh from interest on fixed deposit. The bank has already deducted 10% TDS on the interest.

Applicable tax rate- 35.54%

Now, if Ramesh decides to report the same to his employer. The employer will deduct income tax @35.54% which will result in total TDS of 45.54%.

Fill in the PAN number, assessment year to which the tax pertains and the contact details correctly.

Enter captcha code as shown and the click proceed.

Step 3 – Confirm the Details

A confirmation page will pop up asking you to double check information. Once again please check information related to PAN and assessment year as indicated by the red arrows.

Next, you can consent by checking the box “I Agree” and click “submit to the bank”.

After which you will be redirected to your bank website for filling in the amount and paying of the taxes.

Step 4 – Pay Income Tax

I have used Canara Bank for illustration. Do fill in the correct tax payment details and check the total before confirming.

Post which you will be prompted for online payment. Fill in the debit card or net banking details and make payment.

Step 5 – Generate the Receipt

On successful payment, you will get a receipt or taxpayer counterfoil. The counterfoil will contain details of the tax payment done.

Please note down the date of payment and the BSR code which will be required while filing tax returns online.

Also, keep tax receipts safely as they will be required at the time of final tax computation and filing of returns.

If you have accidentally missed downloading the tax counterfoil then you can login into the banks portal/ net banking and can regenerate or retrieve the receipt.

Advantages of Paying Income Tax Online

Advantages

You can save lots of time by paying taxes anytime and from any location using net banking or debit card.

You are assured that there are no late penalties or interest as the fund transfers are immediate. Which is helpful even when you are paying at the last moment.

Further, checking tax payment status and follow up is easy and online.

You get an immediate acknowledgment of the tax payments made which is authentic and can be verified online at the tin-nsdl website.

Copy of the receipt (tax counterfoil) can be stored safely online and also can be retrieved online at a later date.

Self Assessment Tax

Self-assessment tax arises when you missed informing any income to your employer or missed while making the final payment of advance tax.

There might be chances that TDS was not deducted or mistakenly deducted at a lower rate or not deposited in the government account.

There are possibilities that you may not have added interest on the savings account or fixed deposit to your total income which you remember later. All of which requires you to pay self-assessment tax.

Online filing of tax returns is not possible unless you have paid tax dues in full. The form does not let you submit the tax return form.

You will see the tax payable amount while filing returns, which is nothing but self-assessment tax.

Note: In case you came to know later than March 31st, then make sure you pay interest along with self-assessment taxes.